Ports & Ships Maritime News

Feb 23, 2010
Author: Terry Hutson

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  • First View – MSC CARLA

  • Economists upbeat about GDP figures

  • Piracy update – NATO issues new warning

  • South Africa, China to boost relations

  • New face in cyberspace for Safmarine

  • PricewaterhouseCoopers: Shipping survey reveals challenging times ahead

  • News clips – Keeping it brief

  • Today’s recommended Read –XXXXXXXX

  • Pics of the day – MAERSK BRATAN


    First View – MSC CARLA

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    The MSC container ship MSC CARLA (35,953-gt, built 1986) enters Durban harbour along the recently widened and deepened entrance channel. The 3,022-TEU ship is a sister vessel to MSC Noa and MSC Jade, both regular callers in South African ports. Picture by Terry Hutson

    Economists upbeat about GDP figures

    Pretoria - Statistics South Africa (Stats SA) will this week release the country's Gross Domestic Product (GDP) for the forth quarter of 2009 and economists are cautiously upbeat about it.

    South Africa eased out of its first recession after 17 years in the third quarter of last year.

    "We expecting it to be quite better at 2.6 percent quarter-on-quarter seasonally adjusted and annualised," said Nedbank economist Carmen Altenkirch on Monday.

    South Africa's GDP for the third quarter of 2009 increased by 0.9 percent

    Altenkirch said the manufacturing sector is likely to favourably contribute to GDP.

    "The sector has improved over several months as a result of pick up of demand globally. There has also been improvement in the construction sector," she said.

    Investment Solutions senior economist Chris Hart told BuaNews: "We are definitely looking at an improvement although not much but things like mining should experience some growth. Manufacturing is still in the doldrums particularly with vehicles,"

    Standard Bank is expecting a 3.2 percent quarter-on-quarter improvement. "This is due to the upside result of improved manufacturing, electricity consumption and wholesale trade data," said economist Danelee van Dyk.

    The economists however cautioned that recovery of the country's economy will be slow.

    Additional to the GDP figures, Stats SA will release the Consumer Price Index (CPI) for January on Wednesday.

    In December, CPI, which is used to measure inflation, came in at 6.3 percent. "We expect it to stay above six percent with the contributors still being base effects from last year and the strength of the Rand," said Hart.

    Standard Bank is forecasting inflation to come in at 6.4 percent.

    "It will increase marginally higher due to technical base effects but it should return to the target by March," she said, adding that food inflation played a key role in keeping inflation low and that it is likely to continue doing so for the rest of the year.

    Commenting on the Reserve Bank's Monetary Policy Committee next month, van Dyk said the GDP figures will have no bearing on the central bank's decision regarding rates unless if the economy performs badly.

    "It will have no bearing on the MPC other than confirm that the economy is turning around. Economic growth will have to disappoint for the bank to cut rates further," she said.

    Standard Bank expects the central bank to cut rates again by 50 basis points only in November. - BuaNews

    Piracy update – NATO issues new warning

    NATO maritime commander, Admiral Sir Trevor Soar has warned seafarers sailing through the Gulf of Aden of the danger of complacency towards pirate attacks.

    “Whilst NATO, her maritime partners and other navies are working hard conducting counter-piracy patrols, ships' masters have to accept personal responsibility for the safety of their crew and should have in place the recommended self-protection measures against pirate attacks,” said Admiral Soar, who is based at NATO's maritime HQ in Northwood, London.

    Self-protection "Best Management Practices" for maritime shipping have been in place for 12 months. They advise, amongst other things, that vessels that sail through the Gulf of Aden transit within the Internationally Recommended Transit Corridor (IRTC) - a sea corridor which is patrolled by warships from NATO, the EU Naval Force (EUNAVFOR) and the Combined Maritime Force (CMF) and other maritime nations.

    Vessels are also advised not to travel at low speeds or give pirates easy access by leaving ropes or boarding ladders hanging over the side. Larger ships are advised to have water cannons rigged and razor sharp wire around their structure to prevent pirates climbing onboard.

    All international vessels transiting the area are encouraged to register with the UK's Maritime Trade Organisation (UKMTO), based in Dubai and the EU's Maritime Security Center Horn of Africa (MSCHOA), London, so that their transits can be monitored and any incidents quickly reported by the master of the vessel.

    “Since the NATO mission started, there has been a 50 percent drop in piracy incidents in the Gulf of Aden, but there is still a need for vigilance. The monsoon period is due to end and over the next few weeks we may well see a rise in pirate gangs attempting to hijack vulnerable ships,” Admiral Soar stated.

    US official calls for cheaper piracy patrols

    Tom Countryman, the principal deputy assistant secretary of state for political-military affairs, said in Washington last week that the success rate for pirate attacks in the Gulf of Aden between the Somali and Yemen coastlines has fallen to nearly zero.

    “There's been only one successful hijacking in that area since last summer. That's the area where the international naval vessels are concentrated and where an internationally recognised transit corridor exists. That's an area of about a million square miles, and the success rate is very important,” he said.

    “What has happened is that the focus of pirate attacks has shifted from the Gulf of Aden, south into the Somali Basin, a body of water twice as large as the Gulf of Aden. And the success rate for pirate attacks in that area has gone up, as has the absolute number of attempts in that region. This is one of the challenges that the international military presence is seeking to deal with: Can you devote adequate resources in terms of surveillance and in terms of actual presence of a naval vessel to deter piracy in that broader area as well?”

    Countryman said it was expensive and urged the need for lowest-cost options to deter piracy. He said that of 198 attacks last year, 50 had been successful, compared with just one in the Gulf of Aden.

    Turkish Navy foils attacks on container ship

    The Turkish Navy frigate TCG GEMLIK has foiled an attack by pirates on the Panama-flagged APL FINLAND (88,089-gt, built 2008), the Turkish press is reporting. TCG Gemlik is on patrol with the UN naval forces operating off Somalia and came to the aid of the container ship which had reported being under attack by pirates in a small boat. The Turkish ship launched its helicopter and with the use of naval commandos on board the frigate and in the helicopter captured seven pirates just as they were about to launch their attack on the merchant ship.

    Nigeria rejects IMO verdict on West African country’s piracy status

    Nigeria’s Federal Government has rejected the view of the International Maritime Organization (IMO) which rates Nigeria as the second mot pirate-prone country in the world.

    NIMASA’s (Nigerian Maritime Administration and Safety Agency) General-Secretary Temisan Omatseye said there is a difference to the kind of attacks taking place on maritime vessels off Nigeria, in that they are not attacks of piracy but armed robberies. And many of these, he claimed, are being instigated by foreign fishing trawlers trying to discourage Nigerians from fishing offshore.

    Omatseye said that the definition of piracy did not often apply off Nigeria. What was happening off Nigeria could not be compared with what was happening off Somalia, he claimed. “What we have off the Nigerian coast is armed attacks and many of these are false alarms. A captain will see a speed boat coming in his direction and he will shout and the IMB records it as a pirate attack.”

    South Africa, China to boost relations

    Pretoria - A South African delegation will depart for China later this week to strengthen cooperation and support in the economic, trade and political sphere.

    International Relations and Co-operation Minister Maite Nkoana-Mashabane, who will lead the delegation, will hold discussions with her Chinese counterpart Yang Jiechi on ways to advance the African agenda.

    The visit comes within the context of strengthening South-South Cooperation, which provides the basis for mutual benefit and cooperation between Africa and China, the ministers' office said on Monday.

    Her schedule between Thursday and Friday will include a visit to the South African Pavilion under construction at the Shanghai 2010 World Expo and a courtesy call on the country's Vice President Xi Jinping.

    Nkoana-Mashabane will also address the South African business community in Beijing on Thursday and other business people in China on Friday in Shanghai.

    The visit forms part of a "Strategic Partnership Dialogue" between the two countries.

    According to the department, trade figures show that during the first half of 2009, China was South Africa's number one export destination, with annual growth of 53.9 percent, taking 11.9 percent of the total market.

    South African exports there amounted to R42.45 billion, while imports amounted to R59.10 billion with a trade balance of R16.65 billion.

    The trade deficit in the last quarter of 2009 was in China's favour at R46.5 billion per annum, an increase by R13.3 billion since 2007 and 2008.

    Nkoana-Mashabane will be supported by Director-General, Dr Ayanda Ntsaluba and other senior department officials. - BuaNews

    New face in cyberspace for Safmarine

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    “Easier to use and more intuitive” is how shipping line Safmarine describes the new-look www.safmarine.comwhich was launched on Monday, 22 February 2010.

    “Our key reason for redesigning the Safmarine website was to make it easier for our customers and other shippers to do business with us,” says Jan Van Dooren, Safmarine CIO and e-Commerce Executive.

    “Not only does the new site make it easier for users to find and access information about our shipping services and e-business functions, but we’ve also made it easier for journalists to access the Safmarine Media Centre via a direct link on the safmarine.com home page.”

    Van Dooren says that while the Safmarine website may look very different, the basic functionalities – such as bookings, shipping instructions and bills of lading – have stayed the same and will still be familiar to regular users.

    “Previously all shipping functions were located in a ‘circle’ in the middle of the home page. These functions have now been replaced by a ‘smart shipping flow’ panel which makes it easy to find the information in a logical sequence, from looking up a freight rate and vessel schedule right through to booking cargo, preparing documents, checking invoice status and tracking cargo.”

    Users also have the option of selecting the functionality they require from a drop-down menu which provides click-through access to 34 features. A further enhancement is the provision of ‘intuitive alerts and customer-specific notifications’ relating to the status of a shipper’s cargo.

    Van Dooren says e-Commerce has become the norm in maritime shipping.

    “Around 75 percent of all bookings currently made with Safmarine globally are handled via e-Commerce, which is why we decided to develop a more user-friendly website after investing, substantially, in researching the latest technologies and the needs of our customers.

    “Not only have we succeeded in developing a website which is more user-friendly, but it is also one which is easier and more cost-effective for us to maintain.”

    Van Dooren says Safmarine plans to enhance the site even further throughout 2010. “Our goal is to personalise the website even more by using the information provided by users and the technology which allows us to recognise a user’s previous browsing habits on the site.”

    Anyone requiring assistance in using the new Safmarine website should visit the Live Help function on www.safmarine.com, which is available 24/6 in English, Dutch, Chinese, Spanish and Brazilian Portuguese.

    Image and video hosting by TinyPic
    Jan van Dooren

    PricewaterhouseCoopers: Shipping survey reveals challenging times ahead

    The PricewaterhouseCoopers “Global Shipping Benchmarking Survey 2009,” reveals the impact of the global economic crisis on the shipping industry in 2008. Year 2009 (financial year-end reports not yet available) is expected to be just as challenging

    The global economic crisis has a serious impact on the shipping industry and the recovery of trade to pre-crisis levels is now expected to be slow, according to a new global survey, “Global Shipping Benchmarking Survey 2009’’, conducted by PricewaterhouseCoopers.

    The survey examines some of the key performance indicators (KPIs) of publicly listed global shipping companies for the year 2008 and how these have evolved over the last 5 years. More than 100 publicly listed and private companies in different sub-sectors in the shipping industry were included in the survey.

    The survey’s objective is to identify the impact of the economic crisis on the industry, up to 31 December 2008. The impact of the economic crisis on the shipping industry was felt in the second half of 2008, however, the survey shows that in general it did not impact significantly the companies’ reported performance for that year. A reason for this is that the first half of the year had been particularly robust for most sub-sectors in the shipping industry and provided companies with both the momentum and the liquidity to overcome some of the challenges faced when the crisis struck.

    Nevertheless, according to the survey, during 2009, the impact of the economic crisis on the shipping industry is significant, bringing a sharp decline in hire rates, shortage of trade finance, significant orderbook, impairment losses, as well as breaches in loan covenants.

    Socrates Leptos-Bourgi, global shipping leader, PricewaterhouseCoopers, commented: “Never before have the volatility and fluctuations in the shipping industry been as significant as in 2008. Shipping appears to have been harder hit by the crisis than other industries.”

    Shortage of trade finance is another issue created by the global economic crisis. When Lehman Brothers collapsed, virtually all forms of trade finance froze. With a significant proportion of world trade being financed through letters of credit, this has meant that no cargoes could be lifted or ordered. Coupled with the fall in world demand for consumer products, the recovery of trade to pre-crisis levels is proving to be slow.

    Banks continue to be extremely cautious in their lending activities, including those dedicated to shipping finance. This has put further pressure on companies that continue to have unfinanced commitments, particularly for new vessels being constructed at shipyards. Combined with falling vessel values, such companies are asked to increase their equity participation and, unless such shipbuilding programs are restructured, postponed or cancelled altogether, defaults are likely. Nevertheless, companies that realised significant cash returns during the period of high returns and have kept such funds, may be somewhat shielded.

    Unfortunately, the rapid decline in demand for tonnage happened when the order book for almost all vessel types stood at record high levels. The results of the benchmarking analysis demonstrate that the attractive return on investment in most shipping sub-sectors from 2004–2007 has encouraged investors and ship owners to invest in new vessels by placing orders with shipyards. According to market data, the world order book by sector stood at the end of 2008 at 43% of the existing fleet for Tankers, at 69% for Dry Bulk vessels, and 53% for Container Ships. The order book indicates a potentially significant mismatch between demand and supply for tonnage, which has not gone unnoticed by shipping companies.

    The increased volatility in hire rates, often close to operating break-even points, and the shortage of finance have kept the Sale & Purchase activity in the second hand market to very low levels. This has prompted some brokers in the industry (who base their valuation of vessels on recently concluded transactions between “willing buyer and willing seller”) to decline to provide market valuations of vessels. Nevertheless, even in the few transactions that are being concluded in the current market, it is evident that such values have declined significantly, exposing shipping companies to possible breaches of their loan-to-value covenants which would entitle the lender to demand mitigating action, including immediate repayment of the associated loan balance.

    To cover the associated exposures and risks, some companies have proactively negotiated with their banks the restructuring of loan terms or arranged for specific covenant waivers for a period of time after the balance sheet date, so as to defer the assessment under the specific covenant clause. Generally, such waivers are extended to a period at least one year after the balance sheet date, in order to avoid classification of the associated loans as current liabilities, in the event that the lender would be in a position to demand immediate repayment of the outstanding obligations.

    According to the survey, 21% of the companies have reported that they received waivers and/or modified their loan covenants. This was mostly in the dry bulk sector which was the hardest hit sector by the end of 2008. Additionally, 25% of the companies have reported that they restructured/refinanced their loan obligations before the date of issue of their 2008 annual reports. These trends are expected to continue in 2009 with vessel values continuing to be significantly lower than in the last few years and the crisis continuing to depress hire rates, particularly in the tanker sector.

    More than half of the companies participating in the survey reported asset impairments. Of those surveyed, 26 companies reported impairment on vessel values, 22 on goodwill and 20 on other assets. Asset impairments were mainly reported in the dry bulk sector. Recent valuations by independent brokers in the current market show extremely low values compared to new build prices. This has led some market participants to seek alternative valuation methods.

    As a direct result of the aforementioned issues, some companies are expected to fall into financial difficulty as revenues decline, capital commitments fall due and cash reserves dry up. In such cases, lenders may be more reluctant to restructure debt or provide covenant waivers, keeping more legal options open to pursue such companies. If, as a result, loan balances are classified as current liabilities, this may cause breach of other financial covenants and have potential repercussions on other creditors.

    Of the audit reports on the annual reports of the companies surveyed, only 7% had either a going concern qualification or a going concern emphasis of matter. It is expected that the immediate future will be more difficult for shipping companies, particularly as cash reserves are depleted.

    Based on existing trends and developments, it is expected that companies will continue to renegotiate with their lenders and creditors better terms on existing contracts in order to manage cash flow more effectively. This will involve time consuming and difficult discussions with yards, banks and suppliers. Some companies will succeed in these efforts, but others will not. Either way, the 2009 annual reports of the shipping industry are anticipated with great interest.

    News clips – Keeping it brief

    Sonangol orders five suezmax tankers with DSME

    Angola’s national oil company Sonangol has placed orders for five suezmax tankers with Daewoo Shipbuilding & Marine Engineering. In a contract worth USD348 million the 160,000-dwt ships are scheduled for delivery between mid-2011 and 2013.

    Pics of the day –MAERSK BRATAN

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    The 3,194-TEU container ship MAERSK BRATAN (35,835-gt, built 2009), which called in Cape Town on Sunday. Pictures by Ian Shiffman

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    Don’t forget to send us your news and press releases for inclusion in the News Bulletins. Shipping related pictures submitted by readers are always welcome – please email to info@ports.co.za

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